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Start Up Business Costs

Simple Alliance, Kenya Limited


Business Cash

To whichever business entity, cash is a very critical component. Using cash, you are able to run your small business. The manager at a large business entity, such as Nakumatt, also regards cash as an important element. Basically, all business functions, from procurement to distribution to production, run on cash. This is regardless of whether the business is a start-up one or if it has been in operation for years.      

The Start-Up Business

If cash is important to existing business entities, it is critical to your start-up business.  This is because of a number of reasons. Namely:

  • Preoperational expenses
  • Break even projection

Preoperational Costs

Before you open your doors to customers, you will have spent some start up money. You will likely have put in a considerable amount of fiscal and time resources into your new business.  These expenses constitute start up business costs or start up capital.

Monetary Expenses

Your start-up money goes into various uses. You may have bought a piece of land on which to put up your business premises.  Additional cash could have gone into constructing the building where your start-up business is to be based.  Further, you may have used money to procure equipment and machinery for your business in case you are opening a service business. For a product-based business, you may need to spend cash in buying starting inventory.  Other expenses that you may get into pertain to items such as utilities or security services. If you are not building your own business premises, you could rent a commercial property. 

Time Resources

From the moment you decide to open up a new business, you will spend considerable time bringing this idea to fruition. You may need to meet important contacts such as the landlord. You may also need to scout around for potential suppliers.  You may need to visit relevant government offices to acquire the necessary licences. The time you spend while undertaking these activities has monetary value.         

Break-Even Forecast

Usually, you spend some short time period before your business’ cash flow becomes positive. This means that you will be spending more money than you are receiving from your business. So as to adequately plan for this period, you need to compute your cash requirement s up to the breakeven point.  

Computing Start-Up Business Cash Requirements 

So as to ensure smooth operations without nasty surprises, you need to calculate the amount of cash you need for your new business. Your computation needs to include the cash you need before opening up your venture.    

A Welcome Aid

To make your initial cash requirement calculations, we have prepared a template for your use. The template is in the attached MS Excel (version 5.0) file. You need to download the file and copy it onto your Start directory.   

Benefits

You derive several advantages from using the attached initial cash requirement template. Some major merits include:

  • Single download requirement
  • Pre-prepared categories for major expense items
  • Automated calculation ability
  • Fully customisable feature
  • Added convenience

Attachments

Initial Cash Requirements

Cash is a crucial business element. the need for adequate start up capital call for your attention. For smooth business operation, you need to calculate the cash requirements for your start up business. You need to create a start up budget. This computation shows you your preoperational expenses as well as your costs up to the breakeven point. These are the major start up business costs. To facilitate your calculation, we have created a MS Excel template. Download this worksheet from the above link. Derive the benefits of ease of use, customisability, calculation automation, and single download reuore3mntr from the attachment.

Copyright (C) 2016, Simple Alliance Kenya Limited

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